Barratt Developments expects 'significant' rise in profit this year

Barratt Developments, Britain's biggest housebuilder, said that it expects to
deliver a "significant improvement" in profitability this year,
helped by better margins and the Government's Funding For Lending Scheme.

Barratt, Britain's biggest housebuilder by volume, said that it expected to receive a boost this year from the Government's Funding for Lending Scheme.Photo: Alamy

Barratt said in a trading update on Tuesday that average selling prices increased by around 2.1pc to £185,000 in the six months to the end of December. The company, which returned to profit last year, said that it expected pre-tax profit to more than double to £45m over the period.

Housebuilders including Barratt have improved profit margins by building on cheap land bought after the financial crisis. Barratt said it expects about half of its home completions this year to be made on cheaper land, with operating margins expected to increase to around 8.4pc, from 6.4pc last year.

"We have been investing for the future, successfully securing higher margin land both in the South-East and across the rest of the country that will drive further profit growth."Mark Clare, Barratt chief executive, said in a statement on Tuesday.

"Combined with our continued focus on driving efficiency across the Group, we expect to deliver a significant improvement in profitability for the full year 2013," Barratt added.

Barratt, Britain's biggest housebuilder by volume, also said that it expected to receive a boost this year from the Government's Funding for Lending Scheme launched in the summer, as it repeated that lack of bank lending remained the "key constraint to industry growth".